Transformational leadership and values-based practice at Nestle

Transformational Leadership

Leadership Background

Values-based leadership has a significant impact on the performance and the functioning of an organization. Boje,(2000) cites Burn's (1978) theoretical work on transformational leadership basing his argument on Kohlberg's moral development theory and Weber's (1947) theory of leadership and authority. In his work, Boje, 2000 agrees with Burn's that a moral value-based leader, is the one who emphasizes social exchange between leader and follower in the form of the psychological and mutual needs contract driven by charisma, individualized consideration, intellectual stimulation and inspirational motivation (Homrig, 2001).

The transcendent values of transformational leaders have great potential to promote performance beyond expectations and to effect enormous change on how the organization operates since they seek liberty, justice, equality and collective well being. It therefore appears that a transformational leadership is that kind of leadership that seeks to exploit the full potential of individuals through satisfaction of collective needs.

While Weber's theory (1947) is cited by Boje, (2000) as having several forms of leadership like charismatic, bureaucratic and traditional aspects, all co-exist together and change from the other occurs gradually. Even though the two theorists; Weber (1947) and Burn's (1978) approaches leadership from different perspectives, Boje acknowledges that both of them share a similarity in their work in the sense that both see moral values as an important consideration in any form of leadership (Boje, 2000).

Transformational leaders inspire followers to achieve extraordinary outcomes by providing both meaning and understanding, questioning assumptions, refraining problems, and approaching old situations in new ways. By so doing, leaders are admired, respected and trusted. Followers develop self-worth and in most cases want to identify and emulate their leaders. By providing meaning and challenging work to their followers, leaders end up motivating their followers. Leaders pay attention to each individual's need for achievement and growth by acting as a coach or mentor and ensuring minimal conflicts between employees which may hinder performance (Homrig, 2001). This leadership is clearly seen in operation in the following companies:

Nestle

The company's management and leadership principles state that "people are Nestle's most important asset." The Nestle chief executive officer Peter Brabeck- Letmathe says that all this is embodied in the talents that the company nurtures. He says that "We want to make sure that employees at all our regional companies maintain their original cultures, but follow the same Nestle principles." (Igor, 2004).

The company spends heavily on training and development of its leaders and junior executives at Nestle's training centre in Rive-Reine. Leadership is seen as a gold mine of unlocking future performance and value. This Swiss company has redefined its training needs and the centre for training is widely used as a platform for conveying the values and the principles of Nestle's leadership. The most important aspect of Nestle's leadership is that it believes that extraordinary talent lies deep with their employees a reason they don't headhunt external talent. The CEO believes in a kind of management that is home grown and cultural sensitive.

Nestle's CEO argues that their style of leadership values is inherited from the Swiss cultural heritage but the only difference is that they do things the way American companies by exporting the American way of life, and what they do is to adapt to the local environment. As cited in leadership theories; Nestle leadership is a typical example of transformational leadership that inspires people, mentors, appreciates and understands different culture and norms which enables Nestle to decentralize all its activities, a top-down flow of management which is regarded as a key pillar of Nestle's success.

Igor, (2004) draws a sharp contrast between American and European CEOs in that the American company stands at the service of its CEO while in Europe particularly Nestle, the CEO is at the service of the company. Value added leadership is Nestle's concept of bringing every employee on board irrespective of the position or the title the person holds on the organization chart. Members of the Nestle management board are more concerned with adding value to the company other exercising their powers to demonstrate who is in control of the ship.

Chrysler

Ashley,(1997) in an editorial work on keys to Chrysler remarkable come back after coming face-to-face with bankruptcy and numerous problems of slamming brakes and consequent sales slump rested on platform teams, a modern technical center a new corporate culture. On these grounds, the Chrysler managerial team marked changes in corporate culture, practices and infrastructure led to steady market gains and customer satisfaction.

According to Cliff Davis, the general manager of Chrysler laboratory and car test grounds argues that the turnaround of the company since the economic downturn in the mid to late 1980s came as result of strategic vision shared by everybody. He further argues that no one foresaw market changes and technology needs and admits that strong leadership has catapulted it to success up to today and without such kind of leadership it, was not possible to make a dramatic comeback (Ashley, 1997).

The functional departments were always at loggerheads with each other and looked up to the president to solve their problems. Robert A. Lutz, the company president directed the staff to form platform teams. The employees resisted this change and the president made his point clear that if they were not willing to do it then he was going to get others to the same task. The new platform allowed the teams to solve the problems themselves, identify and fix them.

A good leader is visionary. In 1993 Chrysler had no vision or mission. Performance requires employees to know the vision and mission of the company in order to align their goals with of the company. When Robert Eaton became the chairman in 1993 he involved company officers to develop the vision and the mission. Consequently, better communications, continuous training became part and puzzle of doing business in a new way (Ashley, 1997).

In conclusion, leadership is not only important to companies that operate on a global scale but to domestic firms as well. It's clear that when a leader takes his or her rightful position as a leader change, performance and results manifest. Their values and beliefs become the guiding principles where ideas, imaginations and talents are shared by all. Such transformational leaders not only make their employees to follow them, but they help one another to grow, motivate raise the morale of achieving extraordinary outcomes with few resources.